PG - 880
ll Semester M.F.A. Degree Examination, June 2015
(Semester Scheme)
FINANCE AND ACCOUNTING
Paper ~ 2.3 : Direct Taxes Planning
Time :3 Hours Max. Marks : 80
SECTION-A
1. Answer any 10 questions from the following. Each question carries 2 marks.
(10x2=20)
a) Define net wealth
») Differentiate TDS from advance tax.
6) State the need tor introduction of MAT.
9) Define ‘Amalgamation’ as per Income Tax Act 1964
©) What are the principles of direct taxation ? |
4) Why tax planning is necessary ?
9) What is PAN ? What are ts uses ?
h) What is belated return ?
1) State the provisions of section B0GGA.
1) Name the assessees not liable to Wealth Tax under Wealth Tax Act, 1957.
) What do you mean by prior tax ruling ?
@ _ !) State the criteria to claim additional depreciation
SECTION-B
‘Answer any three questions from the following. (Gx5=15)
2. Explain the provisions regarding set-off and carry forward of losses under the
head income from other sources.
3. State the factors that influence the managerial decision making relating to owning
or leasing fixed assets,
4. Discuss the deduction in respect of certain undertaking in North-Eastern states
UISBOIE.
Pro, PG-880 2 I
5. Calculate the taxable income of the company from the following information for
the Assessment Year 2013-14
8) Book profit Rs. 30 lakhs for the year 2012-13.
b) Subsidiary company loss for the year 2012-13 Rs. 6.25 lakhs.
°°) Brought forward loss Rs. 4.25 lakhs,
4) Speculation business loss for the same year Rs. 6.25 lakhs.
) Capital loss Rs. 1.5 lakhs.
6. From the following information determina the depreciation allowances for
AY. 2012-13.
a) W.D.V. of plant and machinery on 1-04-2012 Rs. 14,00,000.
') P/M purchased gn 15-05-2012 for production department Rs. 12,00,000.
©) In June, 2012 the assessee purchased the following assets :
i) Office appliances 200,000
ii) Air-conditioners for guest house 80,000
ii) Car 5,00,000
d) P/M purchasec‘on 18-11-2012 for production department Rs.5,00,000. Due
to new plant and machinery the installed capacity of production increased by
30% as compared to installed capacity of production as on 31-3-2011
SECTION-C
‘Answer any two questions. Each question carries 15 marks. (2x15=30)
7. Explain the tax benefits of De-merger and Amalgamation of companies. Briefly
highlight the conditions to be fulfilled to avail those benefits.
‘8. What do you mean by zero tax planning ? Discuss the scope of tax planning,
9. XYZ Ltd. submits the following particular of its assets and liabilities on
31-93-2013.
’) Residential house purchased at Madras in 1995 for 60,00,000. itis let out
@ Fs. 16,000 P.M, forthe residential purposes. However itremains vacant
{fortwo months during the year. Municipal taxes payable amount o Rs. 18,000,
Market value of the house Rs. 90,00,000,
i) Gold and siver Rs. 66,00,000.
Ii) Motor car for the use of the directors Rs. 15,00,000. iv) Deposits under natural deposit scheme Rs. 1,80,00,000.
¥) Cashin hand Rs. 2,50,000
vi) Cash at bank Rs. 15,00,000.
vii) Land at Amritsar, permitted to construct only o the extent of 40% of the land
20,00,000.
Loan taken for purchase of land Rs. 6,00,000.
ix) Purchase of land for factory in 2011 March Rs. 18,00,000,
x) Units of UTI and mutual fund Rs. 2,00,000.
xi) Airoralt for the Go. use Rs. 3,00,00,000
Compute the Net Wealth and Wealth Tax Liabilities for the A.Y. 2012-13,
10. The following particulars are provided by Best India Co. Ltd. Trading, Profit and
Loss A/c for the year ending on 31-3-2013.
Particulars Amount Particulars: ‘Amount
To Purchase 1,83,500 By Sales £20,20,000
ToEntertainmentexpenses 19,500 By Amount withdraw
To Travelling expenses 40,000 from General Reserve 2,00,000
To Depreciation 270000 ByLT.C.. 150,000
To Income tax 1,95,000. By Transferfees 2,000
To Wealth tax 8300 By Profit on sale of
‘To Outstanding sales tax 18,000 Motor car 14,400
To Provision for By Interest on tax free
unascertained liabilities 40,000 Government Securities 10,000
‘To Proposed dividend 90,000
To Tax consultation fee 12,000
To Provision for Loss of
Subsidiary Co. 23,500
To Salaries 41,90,000
To Sundry Expense 83,000
ToNet profit 411,83,600
22,96,400 22,96,400
* PG-880 PG-880 +
Additional information :
41) Value of plant and machinery as on 1-04-2012 was Rs, 35, 00,000 and buildings
ss. 6,00,000.
2) Excise duty of 2010-11 paid during the year Rs. 42,500 was not charged to
PIL Alc,
'8) Sundry expenses include an item of Rs. 36,000 paid in cash.
4) Out of the outstanding amount of sales tax Rs. 14,500 was paid before due
date of filing the returns,
'5) Unabsorbed depreciation B/F is Rs. 1,80,000 for accounting purposes.
6) Molor car was sold during the year for Rs. 80,000. Its WDV on 1-04-2012
‘was Rs. 50,000. It was purchased for Rs. 1,10,000 in the past.
Compute:
i) Total income of he company
li) Book Profit under 115JB
Ii) Tax liability of the Company
iv) Tax credit.
‘SECTION-D 5
11, From the following information determine whether the assessee (MVR Lid.) should
purchase the Machine by Installment or Hire.
1) Cost of five annual installments of Rs. 6,00,000 each payable in the beginning
of each year.
2) Hire charges Rs. 4,50,000 P.A. for eight years payable in the beginning of
each year.
3) Residential value of Fis, 1,50,000 atter eight years.
4) Rate of depreciation 15%.
5) Cost of capital 10%.
6) Tax rate 30% with usual cesses,
7) Present value @ 10%.
Tree ee eer Le aad
909 826 751 683 621 564 531 467
8) Loss on sale of machine set off against short term gains. ‘0 PG-710
Il Semester M.F.A. Degree Examination, June 2015
(cBcs)
Finance and Accounting
Paper — 2.3 : CORPORATE TAX PLANNING
Time: 8 Hours Max. Marks : 70
Instruction : Answer all Sections.
SECTION-A
1. Answer any seven questions out often questions. Each question carries two
marks. (12=14)
a) Define Block of assets.
+b) Write the principles of direct taxation.
©) Differentiate between "Tax evasion’ and "Tax avoidance’
1d) What are the exceptions to the general rule of previous year ?
e «) Define net wealth w/s 2 (m) of Wealth Tax Act, 1957.
) How do you treat short term and fong term capital gain liable for securities
transaction tax (STT) u/s 111A?
49) State the applicability and non-appii ‘of Wealth Tax Act.
h) Define assessment year and previous year.
I) State the specific managerial decisions relating to retain of replace
|) Give the tax rates applicable for company assessee
pro. PG-710 2
SECTION-B
‘Answer any four questions out of six questions. Each question carries five marks.
(4x5=20)
2. Discuss the tax provisions under Section 35 of Income Tax Act, 1961
3. Explain the deemed assets u/s of Wealth Tax Act, 1957.
4, Discuss the tax incentives available under Section 80ID.
5. An industrial undertaking which commences the manufacturing activity w.e.f.
(01/08/2014 has acquired the following assets during the previous year 2014-15.
Assets Dateof Datewhen Cost of
acquisition put intouse acquisition
(in Rss)
Furniture 124-2014 1-8-2014 50,0000
Plant and Machinery
i. Equipment used in solid
waste management 252014 1-8:2014 4.00000
il, Machinery A 135-2014 1-8-2014 —_17,00,000
Ii, Machinery B 192014 31-10-2014 7,00,000
iv. Machinery G (second hand) 11-2015 134-2015 2,00,000
. Motor car 122015 622015 6,00,000
Vi, Air conditioner (installed in office) 1-2-2015 13-2015 ——1,00,000
Compute the allowable depreciation u's 32 forthe A.Y., 2015-16 and WDV as on
01-04-2016. * PG-710
6. ACG Company Limited has let out a premise with effect from 1*' October 2014
‘on monthly rent of Rs. 1,50,000. The lease is valid for 10 years and tenant has
undertaken to pay a deposit equivalent to 3 months rent. The tenant has.
Undertaken to pay the Municipal taxes ofthe premises amounting to is, 3,00,000.
What will be the value of the property under Schedule Il of the Wealth Tax Act
for the assessment to Wealth Tax ?
What are the circumstances under which the Assessing Officer is not required
{o follow the procedure laid down for evaluation of the house property in Rule 3
of Schedule lof the Wealth Tax Act, 1957?
7. Compute Tax payable by Roman Limited for various assessment years from
the following details assuming that the rates of tax for the past and future years
shall be same as that for the current assessment year.
Assessment Year Total incomeasper Book Profits u/s
Income Tax Act 11508
2014-15, 2,10,000 7,580,000
2015-16 2,70,000 10,00,000
2016-17 9,00,000 412,60,000
2017-18 1,85,000 6,25,000
2018-19 750,000 750,000
What is Tax Credit ? State its tax provision wis 115JAA. PG-710 +
SECTION-C
‘Answer any three questions out of five questions. Each question carries twelve
marks, (Gx12=36)
8. Discuss the following :
a) Types of assessment.
b) Assets u/s 2 (ea) of Wealth Tax Act, 1957.
9. Explain the tax provisions regarding set-off and carry forward of losses under
the Income Tax Act, 1961.
10. Mr. Mohit Sharma is the owner of a house property which is constructed on
leasehold land. He has let out this house property to a tenant for Rs. 15,750 per
month. The other terms are as under.
4) The tenant will pay half the Municipal taxes and bear the cost of repairs.
2) He will pay Rs, 1,50,000 as advance on which no interest willbe paid to him
and this amount wil be refunded at the time of vacating the house.
3) He will pay Rs. 90,000 as premium for leasing the property for five years.
4) The annual value assessed by the local authority is Rs. 2,70,000 and taxes
levied and paid is Rs. 36,000,
5) The tenant spent Rs. 60,000 on the repairs of the house.
6) The different between un built area and specified areas 10% of the aggregate:
area.
7) He paid Rs. 1,80,000 for the acquisition of the land now the Lessor's value of
the lands Fs. 8,00,000. The lessor charges 40% of the uneammed increase on
the transfer ofthe house property. The unexpired period of lease is 60 years.
Find out the value of the house for wealth tax purpose, ifthe cost of the
building (including land) in 1981 was Rs. 18,00,000. (Ann & PG-710
+1. From the folowing information determine whether assessoe should "Purchase
the asset or take on lease’.
a) Cost of asset Rs. 10,00,000.
b) Rate of depreciation 15 %.
©) Rate of interest 10%.
) Repayment of loan by the assessee Rs. 1,60,000p.4
€) Rate of tax 30.9 %,
4). Residual value of Rs. 1,60,000 after 5 years.
4g) Profitof the assessee Rs. 10,00,000 before depreciation, interest and tax or
before lease rent and tax.
hh) Lease rent Rs. 2,40,000p.a.
1) Present value factor @ 10 % is
Year 1 2 aun meen (ee
PN. Factor | o.oo | 0.826 | 0751 | o.css | 0.621
42, The following particulars are furnished by CNR Company Limited.
‘Trading and Profitand Loss Account for the year ending 31-03-2015
Particulars Amount Particulars ‘Amount
(ins) (in Rs.)
To Opening stock 7,69,000. By Sale of goods
To Purchases 25,95,000 manufactured 86,00,000
don
‘To Advertisement expenses 2,65,000 By Interest rec
To Travelling expenses, 1,35,000 fixed deposits 75,000 PG-710 * ‘imme A
To Depreciation 825,000 Bysaleoftraded goods 12,785,000
To contribution to National Byotherbusiness incomes 27,500
Laboratory for Scientiic By Long term capital gain
Research 41,75,000 liable for Securities
To Income Tax 4,75,000 Transaction Tax(STT) ——_1,80,000
To Wealth Tax 1,25,500 By bad debts recovered
ToEntertainment expenses 52,500 _ disallowed eartier 45,000
To Ols Sales Tax 65,000 By long term capital gain
‘To provision for unascertained onsale of building 2,50,000
Habiity 41,90,000 By amount withdrawn from
To salaries and wages 9,20,000 contingency reserves 19,50,000
To Auditor's fees 1,80,000 By Closing stock 9,54,000
To provision for loss of By income from unitin SEZ _3,15,000
subsidiary company 97,500
‘To proposed dividend 345,000
To Sundry expenses 41,50,000,
To Net profit 257,000
75,71,500 75,71,500
Additional information :
’) Sundry expenses include an item of Rs. 35,000 paid in cash.
ji) Customs duty of 2012 ~ 13 paid during the year Rs. 1,05,000 was not
considered in the above account.
il) Advertisement expenses include an item of Ris. 45,000 given to a poltical
patty.
iv) Out of the O/s amount of sales tax Rs. 20,000 was paid before due date of
filing of retum of income, PG-710
+) Brought forward business loss Rs. 8,00,000 for income tax purpose and
Rs, 6,50,000 for accounting purposes.
vi) Brought forward unabsorbed depreciation is Rs. 5,00,000 for accounting
purposes.
vil) Value of Plant and Machinery as on 01-04-2014 was Fis. 90,00,000 and
Building Fs. 16,00,000 and Furniture Rs. 6,00,000. Rate of depreciation 15 %
con plant and machinery and 10% of Building and Furniture
vill) Opening stock was overvalued by Fis. 95,000 and closing stock was
overvalued by Rs. 1,12,500.
Compute:
a) Total income.
) Book profit u's 115yB.
©) Total tax ibility for the A.Y. 2015 ~ 16. ‘0 PG-585
Il Semester M.F.A. Degree Examination, June/July 2014
(Semester Scheme)
FINANCE & ACCOUNTING
Paper - 2.3 : Direct Taxes and Planning
Time : 3 Hours Max. Marks : 80
Instruction : Answer to all Sections.
SECTION-A
1, Answer any 10 questions from the following each question carries 2 marks.
(10x2=20)
2) Distinguish between Tax avoidance’ and “Tax Evasion,
+) State the tax provisions of Section 35CCB of the Income Tax Act 1961
©) Define ‘Net Wealth
¢) Whats the need for introducing MAT Us 115 JB
¢) What is PAN ? What are its uses ?
) Whatis reassessment ?
9) Define Person Us 2(31)..
h) What are the exceptions to the general rule of previous year ?
1) State the specitic managerial decisions relating to ‘Own’ or'Lease’
\_D) Slate the tax provisions of Section 35ABB,
kk) Mention the time frame for advance payment of tax for company assessee,
1) Whatis ‘Tax base’ ?
SECTION-B
Answer any three questions from the following, (Bx5=15)
2. Explain the scope of Tax planning with respect to
a) Make or Buy
b) Retain or replace
Pro. eaeanes a na
‘3. What are the exempted assets rom Wealth tax u/s 5 of Wealth Tax Act ?
4. Write a note on Doubie taxation treaties in India
6. Discuss the deduction in respect of industrial undertaking or enterprise engaged
in infrastructure development uls 801A.
6. °X'Lid, is engaged in the business of manulacture of computer hardware since
1995, During the previous year 2012-13, the following assets are acquired and
Put to use,
(Rs. in thousands)
Particulars: Block Block=Il Block —Il)
Rate of depreciation 15% 30% 60%
Number of assets in the block 1 2 7
Depreciable value of the 4,800 2,500 500
block on April 1, 2012
‘Adcitions of Plant (new)
during the previous year 2012-13
Plant A 5,700 - 2
PlantB 400 =
Plant Ss = 4,700
Sale of old plants 8 2870 4,200
{one plant in each block)
Plant A, Band Care acquired during May 2012 and put to use during September
2012, However, Plant Bis put to use in the last week of March 2013,
Find out the amount of Depreciation, Additional Depreciation and Capital gains it
any,
SECTION-C
Answer any two questions. Each question carries fifteen marks. Answer to theory
questions should not exceed three pages. (2x18=30)
7. Discuss the provisions regarding set-olf carry forward of losses under the Income
Tax Act, 1961 ‘0 * PG - 585
8, State the steps in the valuation of house for wealth tax purpose as stipulated
Linder Section 7 of Wealth Tax Act read with Schedule Il to the Act
9, ABC Ltd. submits the following particulars of its assets and liabilities as on
91-03-2013,
Residential house purchased at Madras in 1990 for 25,00,000, It is lot out at
Rs, 7,500 pm for the residential purposes. However it remains vacant for two
months during the year. Municipal taxes payable amount to Rs. 7,500.
a) Market value of the house '35,00,000
) Gold and Silver 28,00,000
12) Motor car for the use of Directors +5,00,000
4d) Deposits under National deposit scheme 75,00,000
@) Cashin hand 50,000
4) Cash at Bank 22,50,000
9) Landat Amritsar 5,00,000
(but permitted to construct only to the
extent of 40% of the land)
fh) Loan taken for purchase of land 2,00,000
i) Purchase of land for factory in 2003 March 5,00,000
|) Units of U.T.1 and Mutual fund ‘50,000
k) Aircraft for the company use 1,00,00,000
Compute its Net wealth and wealth Tax liabilities forthe AY 2013-14.
10. °X’ Ltd, manufactures electric pumping sets. The company has the option to
eltner make or buy from the market. Component 'Y' used in manuacture of
pumping sets. The following detals are avaliable
The component will be manufactured on new machine costing Rs. 1,00,000 with
a life of 10 years. Materials required cost Rs. 2 per kg and wages Rs. 0.90 per
our, The salary of the foreman employed is Rs. 1,500 per month and other
variable overheads include Rs. 20,000 for manufacturing 25,000 components,
per year. Materials requirement is 25,000 kgs and require 50,000 labor hours.
The component is availabe in the market at Rs. 4.30 per piece.
Wilt be profitable to make or buy the component
Does it make any difference ifthe component can be manufactured on an existing
machine. PG ~ 585 o OT
SECTION-D a
Compulsory, (15218)
11, Fromithe following particulars of ABC Ltd, Compute Tax iabiliy forthe AY 2019-14.
Trading and Profit and Loss account for the year ending 31-03-2013,
Particulars Amount Particulars Amount
To Purchases 435,000 BySalecf processed goods | 25,75,000
ToEntertainmentexpenses 25,000 By Sale of other goods 42,16,000
To Travelling expenses 71,000 By amount withdrawn
To Depreciation 6,75,000 from general reserve 2,00,000
To Income tax 4,01,000
ToWealth tax 42,000
To Customs duty due 21,000
To Provisions for 180,000
tunascertained liabilities
To Proposed ividend 75,000
ToAuditfeos 225,000
To Provision forloss from 37,000
subsidiary company
To Salary of M.D. 4,95,000
To Net profit 19,38,000
39,90,000 39,90,000
Additional information :
41) Value of plant and machinery owned by company is Ris. 65,00,000.
2) Excise duty of 2008-10 paid during the year is Rs. 95,600.
3) Depreciation Us 32s Rs. 7,35,000.
4) Unabsorbed business loss is Rs. 12,20,000 for income tax purposes and for
accounting purposes Rs. 10,10,000, loss is brought forward from assessment
year 2006-07.
8) Unabsorbed depreciation for accounting purpose is Ris. 345,000,
6) For income tax purpose, unabsorbed depreciation is Rs. 18,00,000,
7) Out ot customs duty due of Rs. 21,000 Rs, 10,000 remained unpaid til
30-09-2013 (dus date of fling of returns)
8) The purchases includes one item where in Rs. 25,000 was paid in cash under
‘one payment {purchase of chemical) TT PG = 829
ll Semester M.F.A. Degree Examination, July 2012
(Semester Scheme)
FINANCE AND ACCOUNTING
2.3 : Direct Taxes Planning
Time: 3 Hours Max. Marks : 80
SECTION-A
41. Answer any 10 questions from the following. Each question carries two marks.
(10%2=20)
a) What are exceptions to the general rule of P.Y. ?
) Give the meaning of company in which the public are substantially interested.
) What do you mean by progressive rates taxation ?
4d) Differentiate between Tax Planning’ and "Tax avoidance’.
) Define ‘Amalgamation’ as per Income Tax Act 1961
f). State the need for introduction of MAT.
9) State the provision of Sec. 139(1)..
h) How are going to treat L.T.C.G. for Tax purpose ?
i) State the Tax provisions of Sec. 80JAA
j) State the specific managerial decisions relating to ‘Make’ or ‘buy’.
k) State the dates for filing of retums by various assessees.
1). Define Net Wealth.
SECTION-B
Answer any three questions from the following (ax5=15)
2. What are the exempted assets from wealth tax L/S 5 Wealth Tax Act. ?
3, Discuss the deductions available U/S 35.
4. Explain the provisions regarding sel-olf and carry forward of losses under the
head income from other sources.
5. Ram Industries Ltd. is engaged in the business of manufacturing chemical since
P.O. PG - 829 2 ma
April 2010. The following assets are purchased by the company.
Assets Cost Dateof purchase Rate of depn. Date of puttouse
Buildings 500,000 6-4-2010 10% 10-4-2010
Computerforoffice 18,000 16-5-10 60% 186-10
Car 4,00,000 106-10 15% 106-10
Plant'X’ (New) —15,00,000 20-4-10 15% 30-410
Plant‘Y" (New) — 10,00,000 10-910 15% 10-10-10
Air condition for
Factory (New) 30,000. 25-6-10 15% 26-6-10
Air condition for
Office 30,000 306-10 15% 30-610
Plant‘Z’ 15,000 20-7-10 100% 6940
Office air conditioner is sold on 31-3-11 for 20,000 and a new air-conditioner is
purchased on 1-1-11 for As. 32,000.
Find out the amount of normal depreciation and additional depreciation for the
AY. 2012-13.
6. What do you understand by advance payment of Tax ? Explain clearly the
provisions of the Income Tax Actin this respect.
SECTION-C
Answer any two questions. Each question carries 15 marks. (2x15=30)
7. Whatis Tax holiday ? Critically evaluate the deductions available U/S 80-1A.
8. Explain the tax benefits of de-merger and amalgamation of companies. Briefly
hheighlight the conditions to be fulfilled to avail those benefits.
9. XYZLId. submits the following particulars of its assets and liabilties on 31-3-2012
1) Residential house purchased at Madras in 1995 for 50,00,000. It is let out
@ Rs. 15,000 pm for the residential purposes. However it remains vacant for
‘two months during the year. Municipal taxes payable amount to Rs. 15,000.
Market value of the house 70,00,000
1) Gold and silver-56,00,000
MN) Motor car for the use of directars—10,00,000,
|V) Deposits under Natural Deposit Scheme-1,50,00,000
V) Gash in hand 1,00,000 ‘ni 0A PG - 657
Il Semester M.F.A. Degree Examination, July/August 2011
(Semester Scheme)
FINANCE AND ACCOUNTS
Paper = 2.3 : Direct Taxes Planning
Time : 3 Hours Max, Marks : 80
SECTION ~ A
1, Answer any 10 questions from the following. Each question carries two marks.
(10x2=20)
a) Define a widely held company.
») Differentiate between first category of assess and second category of assess
ws 207)
©) Why tax planning is necessary ?
«) State the criteria to claim additional depreciation
©) Under what circumstances the A.O, is not required to follow the valuation
norms under Section 7 Schedule III of W.T. Act ?
4) Name the expenditures which are eligible for weighted deductions w 35.
©) Give the meaning of “Tax Credit’ and its provisions
'h) Name the assessees not liable to wealth tax under Wealth Tax Act, 1957.
') Mention the factors to be considered in make or buy decision.
4) What is PAN ? What are its uses ?
) State how to treat preliminary expenses for tax purpose.
1) Mention the time frame for advance payment of tax for company assessee.
SECTION = B
Answer any 3 questions, Each question carries 5 marks. @x5=15)
2. Explain the doctrine of form and substance in the context of Tax planning.
3. How in the incidence of wealth tax affected by nationality and residential status of
an assessee ? Explain with suitable examples.
4, Discuss the deduction in respect of certain undertakings in Nosth-Eastem states
ws 801E.
Pro. PG ~ 657 2
5. MRF Ltd, is engaged in the business of manufacture of tyres. It acquired and
sold the following plant and machinery during the PLY 2010-11
Factory Building P&M Pam Motor Car Furniture
RateofDepn. 10% 50% 100% 15% 10%
WDY onl-4-10 Rs, 15,2000 Rs.2540.000 Nil Rs. 8,60,000 Rs. 460,000
‘Additions Made:
November2010Rs.6,00,000 = Rs. 4,00,000 Rs. 1,20,000
July 2010 — Rs, 10,00,000 Rs, 8,00,000, — ~
Assets (Included
inopening WDV) .
SoldinJan.201 — Rs.540,00 Rs. 1,60,000 Rs. 80,000
Compute : (i) Normal depreciation (ii) additional depreciation for the
AY.2011-12,
6. Explain leasing Vs buying of a business asset asa tool of tax planning.
SECTION ~ C
Answer any two questions. Fach question carries fifteen marks. Answer to theory
question should not exceed three pages. (2x15=30)
7. What do you mean by Zero Tax planning ? Also discuss the seope of tax
planning.
8. Discuss the tax holiday and tax incentives available for companies engaged in,
infrastructure development,
9, The following is the summarized Balance Sheet of XYZ Ltd. as on 31-3-2011
Capital & L Rs. Assets Rs Gohedle IIL
Value) Rs.
Paid up capital —_1,80,00,000. Plant & Machinery 24,002,000 (20,00,000)
Reserves 40,00,000 Motor car 4,00,000(3,00,+000)
Sundry Creditors 40,20,000 Helicopters for —_—_1,36,00,000(1,00,00,000)
Secured & 32,00,000 business purposes
‘unsecured loans Factory plot 28,00,000 (40,00,000)
(purchased
‘on 2-1-2008) | aNC OE & . PG - 637
House Property
Used for director 24,00,000 (12,00,000)
1 residence
Used for director 36,00,000 (56,00,000)
2 residence
Jewellery 16,00,000(28,00,000)
Shares in other 20,00,000 (30,00,000)
companies
Cash in hand 1,20,000(1,20,000)
Cash at Bank 3,00,000 _(3,00,000)
Total 2,92,20,000 Total 2,92,20,000
Additional Information :
1) Gross annual salary of directors 1&2 are Rs. 4,80,000 and Rs. 6,50,000
respectively
2) Loans of Rs. 32,00,000 represents Rs. 4 lakh for machinery, Rs. 8 lakh for
factory plot and Rs. 20,00,000 for helicopters.
3) The factory Plotis within municipal limits
Compute the Net Wealth of the Company as on 31-3-2011 and the wealth tax
payable.
NO. X Lid., an Indian Co., discloses a profit of Rs. 20,00,000 for the
PLY, 2010-2011 and the following further particulars arc also made available ;
1) The closing stock of the finished goods has uniformly been valued at 109%
under cost every year. The opening and closing stocks for the year were
shown in the books at Rs. 28,00,000 and Rs. 41,50,000 respectively.
2) The book depreciation amounts to Rs, 7,50,000. For tax purposes depreciated
value of block of assets on 1-4-2010 is Rs. 37,50,000.
3) The undernoted debits appear in the Profit and Loss Account
Loss on sale of fixed asset Rs. 62,500. Transfer to investment allowance
reserve account Rs. 1,50,000, new machine was acquired during the year (i.
uring April ata cost of Rs, 8,00,000 and brought in to use within a week. . PG - 657 (A
4) The salaries include gratuity of Rs. 40,000 paid to a retired employee in
accordance with the rules and payment of Rs, 67,500 to the M.D by way of
salary and commission as permitted by the company law board. The M.D
wwas provided with a house owned by the company for which depreciation
of RS. 12,500 and repairs expenses of Rs. 10,000 were claimed. The repair
expenses are included in the Profit and Loss Account under the head “repairs
to building”. The M.D was also reimbursed the salary of Rs. 1,200 paid for
‘a gardener and of Rs. 1,800 paid to a domestic servant. ‘The expenses are
charged (0 “miscellaneous expenses”.
'5) During the year plant and machinery, WDV of Rs. 1,00,000 was sold for Rs.
31,500. The WDV for income tax was Rs. 60,000.
(6) There is a credit of 2,50,000 to the P/L. A/c as being sale proceeds of import
entitlements which the cmpany claims as @ capital receipt not chargeable to
Income Tax.
7) “Interest Account” includes a sum of Rs. 17,500 charged by P.F
Commissioner for delay in depositing the members as well as the compani
contribution,
Compute the total income of the company on the basis of above information
siving your reasons wherever necessary.
SECTION ~ D
‘Compuiso 15
LL. XLtd, an Indian Co., engaged inthe bisiness of manufacture of electric machines,
negotiates for the purchase or taking on hire a machine from a concem in Germany.
If it acquires the machine, then the total cost will be Rs. 30,00,000 payable in 5
‘anmual (Interest Free) installments of Rs, 6,00,000 each, the payments to be made
oon July I each year beginning with the year 2010. Iftakes the machine on hire, it
hhas to pay an annual rent of Rs. 4,00,000 also payable on July 1 each year starting
from the same year 2010, ‘The company proposes to use the machine for 10
years from 2010,
‘The following information is given:
1) The Company is a widely held company and tax rate is 33.99%.
2) Depn. rate is 15% and itis eligible for additional depreciation
3) Cost of capital is at 10% for 10 years is 0.909, 0.826, 0.751, 0.683, 0.621,
0,563, 0.513, 0.467, 0.424, 0.386 respectively,
Decide which one is better alternative, hire or buy in the above situation, ®
‘sc PG - 502
II Semester M.F.A. Degree Examination, June/July 2010
(Semester Scheme)
Finance and Accounting
Paper ~2.3: DIRECT ‘TAXES PLANNING
Time :3 Hours Max, Marks: 80
SECTION — A
Answer any 10 of the following in 3-4 lines each, Fach sub-question carries
2 marks, (10%2=20)
8) What are the Principles of Direct Taxation ?
Dy Pafine Net Wealth.
©) What is Minimum Alternative Tax ws 115JB ?
4) What do you mean by Speculative transaction ?
x ©-Whatis Best Judgement Assessment ?
7 Betine Block of Assets, Why this concept ia important ?
_ Differentiate between Tax Planning, Tax Avoidance and Tax Evasion
* py Define the term “Company” under Income Tax Act.
syste the provisions of ‘section 80GGA’.
When a company is sad to be a resident ?
yk) When belated returns filed ?
3 Siate the need for introducing VAT.
Pro. a ‘Amu a
SECTION - B
PG ~ 502
Answer any three questions from the following : (3x5=15)
2, Explain the income liable for Advance Payment of Tax.
_3Sxplain the scope of Tax Planning with respect to
) Make or Buy
b) Own or Lease,
Ae What are ‘Deemed Assets ws 4 of Wealth Tax Act ?
yo company holds a block of assets (rate of depreciation is 15%) worth
” Rs. 15 lakhs (WDV) in the opening balance of year 2006-07, purchase
the assets for Rs. 20 lakhs during the year 2007-08 and sold the assets worth
Rs, 15 lakhs in the year 2008-09, Calculate the depreciation and value of the
asses at the end of the year 2008-09.
6. Calculate the Taxable Income of the Company from the following information
for the assessment year 2009-10.
48) Book profit Rs. 25 lakhs for the year 2008-09.
») Subsidiary company loss for the year 2008-09 Rs. 5.5 lakhs
¢) Brought forward loss Rs. 3.75 lakhs.
4) Speculative business loss for the same year Rs. 5.5 lakhs.
«) Capital loss Rs. 2 lakhs.
SECTION ~ C
Answer any two questions, Each question carries 15 marks. (2x15=30)
7. Discuss the Provisions of Set-Off and Carry Forward of Losses under the Income
Tax Act,
8, State the steps in the valuation of house for wealth Tax purpose as stipulated
under Sec. 7 of W.T. Act read with Schedule III to the Act.
9. XYZ submits the following particulars ofits assets and liabilities on 31-03-00 :
) Residential house purchased at Madras in 1990 for 50,00,000. Itis let out @
Rs, 15,000 pam. for the residential purposes. However it remains vacant for
to months during the year. Municipal taxes payable amount to Rs, 15,000,
‘Market value of the house 70,00,000
b) Gold and Silver ~ . 56,00,000 ¢) Motor car forthe use of directors 10,00,000
4) Deposits under National Deposit Scheme _1,50,00,000
6) Cash in hand . 1,00,000
4) Cash at Bank 5,00,000
#) Land at Am 10,00,000
(But permitted to construct only to the extent
0f 40% of the land)
1) Loan taken for purchase of land 4,00,000
i) Purchase of land for factory in 2003 March 10,00,000
4) Units of U.TI. and Mutual Fund 1,00,000
ie) Aireraft for the Co. use 2,00,00,000
Compute its net wealth and wealth tax liabilities for the A.Y. 2009-10.
. XYZ is a domestic company (in which public ate substantially interested)
manufacturing textiles. For the year ending 31-3-2009, P & L A/e showed Net
profit of Bs. 10 Lakhs on a tumover of Rs. | crore. This included the following
debits to P/L account.
1) Dividend amounting to Rs. 2 lakh paid to the shareholders for the accounting
‘year 2008-09.
2) Interest amounting to Rs. 10,000 paid on the loan taken for the payment of the
‘company’s Income Tax liability
3) Interest amounting to Rs. 15,000 paid on the loan taken to make donation to
an approved charity.
4) a) Rs. 20,000 spent by the Managing Director on his visit to:
i) Canada to buy machinery; and the finalize a collaboration agreement for
anew Independent undertaking proposed to be set up (cement factory)
Rs. 10,000,
USA to study export market for textiles Rs. 10,000,
b) Managing Director’s wife accompanied her husband: Rs. 10,000 was
contributed by the company towards her foreign trip expenses and the
Canadian collaborator paid Rs. 15,000 to her towards expenses.
5) Company incurred Rs. 25,000 as entertainment expenditure.
6) Company incurred expenditure Rs. 1,00,000 as follows :
a) Advertisement in newspaper Rs, 50,000
'b) Advertisement in souvenir of apolitical party Rs. 25,000
) Gnesthouse at factory Rs. 25,000. = 502 4
7)Rs. 10,000 paid to legal adviser in respect of proceedings before Income~Tax
authoriti
8) Penalty for Rs, 24,000 for importing yam in contravention of Import regulation.
9) The company earned long-term capital gains on the sale of investments
(duly indexed) an amount of Rs. 2,00,000 and Rs. 1,00,000 as short term
capital gains. The company was maintaining a racehorse and earned a net
income of Rs. 2,00,000 from that activity.
Compute the Taxable Income of the company and calculate tax payable,
SECTION - D
Compulsory : (et!
11. Decide which one isa better altemnative - lease or buy-in the following situation :
‘Tax rate 30% (plus surcharge and education cess)
Cost of Capital : 14%
Depreciation rate (Income-tax) : 25%
Lease cost : Rs. 34,000 per annum for 5 years (per Rs. 1 lakh)
Present value of Re. I discounted @ 14% is as follows :
‘Year 1 = 877'; Year 2 = .769 ; Year 3 = .675 ; Year 4=.592 ; Year 5 = 519.
Assumptions :
1. The cost of the asset (say machine) is Rs. 1,00,000 with a salvage value of
Rs. 1,000 at the end of five-year period,
2. There is noi
Make any other suitable assumption, if necessary.
icome-tax liability on account of capital gains. sc PG 544
Semester MRA. Degree Examination, June 2009
(Semester Scheme)
FINANCE AND ACCOUNTING
Paper 2:3 — Direct ‘Taxes Planning
ime : 3 Hous Max. Marks : 80
SECTION = A
Answer any 10 questions from the following . Bach question carries two
marks. : (10x2=20)
(4 State the applicability and non-applicability of Wealth Tax Act.
hh) Give the meaning of company in which the public are substantially interested
‘When belated return is filed ?
dd) Whats tx base
e}-Differemiate ‘Advance tax’ from Tax Deducted at Source’
HrBiate the tax provision US 33 ABA.
What ae the benefits from double taxation avoidance treaties ?
(loptate the need for intoducing, VAT
ais tx holiday 7
What do you mean by eotourable devices?
ic) What do you mesa by progressive rates of txes
1b Distingtish between tax avoidance’ and ‘Tax evasion’
SECTION ~B
ngeer any 3 questions, Each question earties $ mis (3x5=15)
FY
cuss any five instances when an assessée has a statutory obligation (o deduct
{ax at source and consequences of non-compliance,
3) Define tax planning. What aré the benefits and limitations of tax planaing ?
4, What are the deductions under sections 8OJTA and 8OIJAA ?
5. MIRF Ld, fumishes the following, particulars of is income forthe P.Y. 2008-09
Rs.
i) Business loss before depreciation {-) 16,090,000
ii) Depreciation unabsorbed © 10,00,000
iii) Income from property 4,00,000
iv) L-T. CG. 8,00,000
¥) Income fom other sources 12,00,000
P00. chase
PG ~ 544 “4 EN
vy) Business expenses include bonus amounting to Rs. 3,00,000. A sum of
Rs. 2,00,000 was paid on 31-8-09 and the balanee was paid on 1-11-09,
vi) Business loss and depreciation cartied forwards
‘As per Accounts ‘As per Income Tax Law
Tusiness toss | Depreciation | B.toss | Depreciation
3008-06 Nil © 150,000 ©) 690,000) 3,0,000
2007.08 | 1,00,000 -Nik 900,000 450,000
Compute total income and tax lability for AY. 09-10.
SECTION - D
(Compulsory) 15
X Lid. Manufectures turbine sets, The company has the option of ether make or
buy form the market component's used in manafactaring of the sls.
“The following details are aveilable
‘The component will be manuftetured on new machine costing Rs, 1 Jakh with
life of 10 years. Material required cost Rs. 2 per Ke. apd wages Re. 0.30 per
hhout. The salary of the foreman employed is Rs. 1,500°P.M, and-ther variable
overheads include Rs. 20,000 for manufacturing 25,000*Ebmponents per year
Material requirement sn 25,000 Kgs and requires 50,009 1g)our hours.
“The component available in the market al RE. 4.30 per piece, Willitbe profitable
to make or buy the component ? Does it make any difference if he component
can be manufactured on an existing machine ? oe + PG = 54
Additional information
i) Gross annual salacies of directors 1 and 2. are Rs. 4,80,000 ‘and 6,00,000
respectively.
ii) Loans of Rs. 8,00,000 represent Rs, 1,00,000 for machinéry Rs. 2,00}600 for
factory plot and Rs. 5,00,000 for helicopters.
iif) The factory plot is with in municipal limits.
Compute the net wealth ofthe company as on 31-3-2009 arid wealth ox payable
HAREM Lal ironed in the basinescat encmitee saftweave
PAL. Ale for the PY 26088 :
Particular Amount Amount,
sine tsps 11,50,000 Esanaine
Salaries 15,00,000 Sates 40,00,000
Provision for encashiment Stock 2,00,000
of euuneal tease 10,000 etm of sce:
General reserve 1,50,000 tax penalty 200,000
Innere ts paiet 4.00.00
Dividends paid 25-3-09 5,00,000
Provision for losses of
T Lad. a subsidiary company 1,00,000
Depreciation ax per accounts —$,00,000
N Profits 15,00,000
59,00,000
You até futiorinfovmed that
i) Business eanenses charged to Pi Ale but not deductable = 1,50,000
ii) Depreciation as per income tax 4,50,000
iil) 39% depreciation in accounts is on account of revaluation of assets
jv) Employeis contiibution forthe year 2008-09 to employees fund (reeogitised)
is Rs, 300,000 ; paid Rs. 2,00,000 on 30-09-09 and Rs: 1,00,000 on 1-12.09,
bu not charged to PL. Ale
Salaries include a sum of Rs. 1,06,000, paid to non-resident employees in Iodia
without deducting
Tax at sources as employee have filed affidavits to pay tax, direct to the govt — e ‘tena NnEn
fi 6c Propesty company Ltdhas tet cut a preniises w.e.P. 1-10-2008 on monthly rent of
w7Rs, F Lakh. The lease is valid for {0 years and ‘Tanant has made ¢ deposit of
-equilent to:3 atonthsieet he Tanant has undertaken to pay dhe miunicigal tween
» of the'pecmises amonuiting to Rs. t'Bakk What will be the value of the property
under schedule [1 of the Wealth Tax Act for the assessment to Wealth Tax?
«» What are the eircumistaices under which the A.O. isnot requited to follow the
procedure iaid'down for evatiiation’ ‘of hse’ property in rule 3 of schedule IH of
es
ty 7+ suction - ARE
Answer any two questions, Lach questions caries 15 niars, Answer to these question
should not exceed three pages ‘ (2x15=30)
7. Explain the term tax-holiday, What are the conditions under which such benefit
is available to the assessee U/S/ 80-IA ? .
8, Discus the scopeof tax planning,
27The following is the summarised balance sheet of VIL LAG. as on 31-3-2009
Capital and Re Aapet is asa
liability, Value)
Faid up capital 45,0,000 rtin and
tages 10,00,000 mahi 600,000 (,00,000)
Suniry creditors 10,05,000 Motor car 1,00,000 (75,000)
‘Secured and Helicopters for By
‘unsecured loans’ 8,00,000 commercial useNIP —34,00,000.(25.00,000)
Factory plot
. (purchased oir DS
Jan 2nd 2007... 7,40,000 (10,400,000)
House property
i set for iP:
Director 1s residences." 6,00,000 —(3,00,000)
i "1 Director? residences¥¥ 9,00,000 (14,00.000)
Jewellany Dy A.0n,000 0a.nn0y
‘ Shares in otner
company 5,00,000 (7,50,000)
Casi in hana IBY “'30:000 (0,000) i
Cash at bank jx\Px 75,000 (75,000)
73,05,000 73,05,009 = ition JP a7:
AlSemester MRA, Degree Examination, June 2008
it (Semester Scheme)
‘ is FINANCE AND ACCOUNTING
2.3 : Direct Taxes Planning
Tae £3 Moms : Max, Marks
t SECTION - a :
Answer any 10 ofthe following in 3.4 tines eark, ch Subquestion caities 2 marks,
i (10x2=2¢
1. @), Define speculative transaction,
©) Define block of assets
©) What is sub-eting >
©, Win ae dace ivcwin 2
© "Who sre eligible for deduction under Seétion 89 GGA ?
What is Tax holiday?
8) State the ses nes of income ta oe dite
8) Whavis advance tax rating 2
i) Whatis “Belated cetum" 2
3) Whats capita asset? :
40 "When person is liable to pay advance tax ?
4) What is Minimum Alternative Tax ?
SECTION — n
AxRE any thee questions, Boch questicn cage § marks
"2. hia tons of wean U5 are exe om weath a > |
i a
3. Enumerate the factors that affect the eeision to make or buy a product. Also state
"ex consideration in this regard."
4. Discoss the Income Tax Provisions for the following
2) Amortization of Preliminary Expenses. payin: Sil
4) Expetditue of Scientitic Research Pyne
« lith. . ae
ee ih er te ga
4a
Aaccreurmdop © Sr
host DRED
cam Pomp tia 40"
Bon te
%. Ul submits the foodie yap bom at
get HF commni} Previous Yé
‘um
AP 7
ag
2006-07 2007.03
(Rs) ‘Rs
Business profits (before. depreciation) © 1,00,009 20,000
Coment depreciation “46.000 20/100
Teo ot ollie sou, 10.000 1.40.00
eerie the met income oF ¥ Life the Assessment Years” 2047-08 arg,
apa gy, ee
Soon i fellowhig iavorration:cetermine tae epreciation allowances fer a.y.
2008-09 *
Re.
Bog Ne Plast a nection 1 12.00.0009
22 YIM purchased on 15-05-2008 ton Production departieni . 10,00,009
©) In tine, 2008 the asessee pujctiase tu following assers
i) Office appliances 1,00,000
') Al-conditioners for guest-houge 60,000
8) Ca : 4,00,000
©) PIM purchased on 10-11-2008 fox Prodiction department 00,000
sites HI set iichiey Phe aaten Sapacity of prodetion in
“y 1059 coupared tiated copa ‘production as on'31-03-200"
SECTION ~¢ :
{ANSWEF any two Gucstions. Bach-guéstion canes 15 marks, + @xis=30)
7 Exphinthe “Set Ot ant Cary Forward of losses" provisions lunder Income ‘Tax Act,
@ xu ica company carrying on business in tbe construction and sate of residential
Tori SHE Mc Lllowig dap ee You determine te tax payaia
for the AY. 2008-09,
Market vata
Gin Rs)
D Landa rat aon SNK 15'00.006
2) Land in urban area (eonstrvetcn
"ot Permitted as per municipal laws) « 28,00,000: ! thd >
hae cicefayy vet eed = ts 4
ati 2 wet
: Pectin lp wie e > vg
<4 Lond in ua aes (held tok in ade sine 2004, 2"
"construction will, be commented during June 2006) 49,50,000
SY to cats (not being held as stock in trade) Kh 11,30,000
“SY Scveley jo, bing hei ws seek teens v 15,00,000
erat 3 2 1,58,00,000
LPL Bank Baltves {8\ Pe \y 3,10,000
pif als pee can ota: ONT 1,70,000
“Gest hots and land appurcnant $C 8,00,000
SY Residential dts of identical size provided to 6 employees’ yi\
{or thet ose Salary of one 6f thet exeveds Rs. 20,080) *'15,00,000
sidenct provided to. M.D (salary exceeds Rs, 2,00,000) ) SAP 10,00,000
15 constricted and remaining inscll (Mt bei
elds stock-i-trade) he 30,00,000
20437 Residence provided to whole timeldirecer (salary
ah
B5, 73,000 te deer ss 25% ety shavsy 17.00,000
© Corpany has taken a loan of Rs. 6, ‘00,000; Rs. 7,00,000 and Rs. 50,000 for
me RCO Hurabers (1), () and (12) rempeetively. Find wot dhe oearen
tw liability Of the company for the AY. 200808,
9 Prajwal td sa domestic company in which the pablie are substantially interested,
T showed a net profit of Rs. 50 Lak far the gest 2007-08 after providing for
imation of Rs. 10 Lakhs but before providing for depreciation The following
are the other particulars : fh
‘i ' x
1) Depuetiation on Plant and Machinery 7,50,000
2) Brought forward business losses, 9,00,000,
-8)'Net Profitinclnt the folowing :
4) Dividend froin X Lid, Caloutn 25,000
©) Dividend from 2, Lid, Bombay 50,000
©) Dividend thom ¥ Lid. Chennai 30.000
@ Short term capital gain on sale of shaves 25,000
© Long tenn capital gin onsale of brldng indexed) 60,000
Varios items debited w the prota anon,
Ui
ae
~ seg pe
W744 ‘ a
Account inchided the followin :
jenses on maintenance of house 10,000
0
i) Ponatty tevied fay infction of excise Laws 5,000
iti) Donation to PM National Relief Fund 10,000, *
iv) Donation to aaproved feunily planning institution
{9 be utilized for promoting family planning“ 10,000
¥) Remuneration to the managing, director “= 1,14,000
¥i) he managing dieoe i also provided rent tee
Accotiumodatien, the company paid rent of Re. 36,000
for the Mat occupy the nanan vecion Yoo00
vit) Eeegratior paymegt to statr 5,000
The company: distipuled dividends on 10-10-07 Re 2,00,000
Conipute the tel rcowe of the-Uo., for the assessnie yeur20U8¢- 09,
10. Discuss the deduetion u/s. O-1A.
SECTION ~ D
(Computsors ‘
1) Feo the foliowing information démine whether ih amuses “shou'd purchases
“nm assets or take on lease
1) Cost of Asset Rs, 1,00,000.
2) Rate of depreciation 15469.
3) Rate of interest 10%, ie,
4) Repayment of loan by the assesee Rs, 20,000 pa.
5) Rate of tax 30,
S) Residual value Rs, 20,000 after fie yeas
2) Profit of the assessee Rs. 100,000 before depreciation, imeest apd ts/before
lease rent anid tox
8) Lease reat Rs. 3,000 pate
®) Surcharge and educational céss es applicable
‘Make suitable assumption of your own’ wherever necesssiy.. >" PS ~ S76
+ TE ay, (WSenesten M.I.A, Examination, May/June 2007
(Semester‘Scheme)
ii. : COMVERCE
SENSIS 8 9 pireet ‘axes Planning -
‘Time : 3 Hons
Max. Masks 80
ta SECTION -A 1052229
Answer any 10 questions from the following. Each question carries ‘two marks
8, Glve he meine of company in wish te publica sbsantiay meerens
8) ve the seéning BE MAT WIS 115 1B
<2 Stave he apolicbity and non-ap tea
©) Whatistarbase?
1) When betaed seni i ied 2
@ Woatis meant by best jndgomont assess
9) Diltécntste'Adeance t
'ax' Feo "Tax Deducted at Stee
© What do you mean by prior tax ruling ?
@ Whardo jou mean by ‘Cotourable devise?
2 Sate the meaning and how to covinpute tax ert UMS 115 JAA
) What are the nses of PAN 7
D. Name the different methods of iax cotlactio
i SECTION-B
Answer any 3 questions. Bach question carries § marks
2. State the factors that influence the managerial decision ‘making relating to owning
OF leasing fixed assets,
xplait in brief th! provisions relating to payment of alvance tax,
4. Explain the "set-off
Act!
and carryforward of losses" provisions mnder Income Tax
Pr, rs 576
5. Discuss the Income Tax provisions / deductions ws 35,
6f % Lis, owns two plants (A 6) depreciation fae 13%. The WDV ofthe bioek
on 1-4-06 is Rs. 12,24,000: Of 20-9-06, plat Bis transfered tp "¥" Lid, foe
Rs. 7,00,000 (FMY is Rs. 1,80,000).
~ On. 14-06, ¥ Lid., owns two plants (M and N depn. rate 15%). W.D.V. of the
Dlock on 1-4-06 is Rs. 2,30,000. Plant'B is put to use by "Y'Ltd,, on 6-11-06,
Plant Mi is sol. by "Y" Lud for Rs. 490,000 an 22-03-07.
Find out the amount of depreciation for te AY 2007-08 in the hinds of X Lt,
and ¥ Ltd. Under the following. situations
1) Me A.0. dees nat want fo take action ier explaiation J Wo Section 43(1),
2) Alter taking prior approval of the Joint Commissioner, the A.O- wants to
estinmte detial est oF plant “Hat Re, 380,000. The wii purpese of uamater
tw recondeal by the AU. is tu veduce the tax finbilty ef "te, by eluting
higher depreciation allowance on Inflated Cost
* SECTION --c
“Answer any two questions. Kaetr question carries 1S marks. Answer'o these question
should not exceed 3 pages
7. Discnss the deduetion US 80-1¢.
8. State the main ingredients which meke tax planning a legitimate exercise.
Y The accounts of Zub Ltd., a domestic corhpany, prepared in uccordanes with the
trovisions of part Il and IIT Gf Scheduté VE to the Companies Act, show the
fattowing position ‘
Profit before depreciation , Rs. 100.00 Iakhs
€) Depn of the curent year Rs. 10.00 lakhs \
Net profit Rs, 90.00 Takis.
The previous year of the coup: ve 9 31-3-07. The proft of
Rs, 100.00 talshs includes profits amoenting to Rs, 10.00 tals. qualifying for
Uechiction U/S. 80-14, 2 PS 576
; i
Chmpated in aecoidance with the provisions of the LT. Act is as
Were iy
Profit before depresiation ~ RE 70,00 lakhs
(Depreciation as per: les — Rs, 60.00 lakhs.
Valence ! Rs, 10.00 lakhs,
‘The-company is eligible to cary forward the following amounts from A.¥
2008-07,
Business loss Rs. 10.00 taks
Umtaorbéd depreciation Rs, 40.00 takes
Sammie — a) The applicability of see 1158 aid
») The eligibility for tax credic in the subsequent year
©) seis craigs
UR Lec, a widely held company, owns the following, assets as on 31.08.07
4 Vand at Bangalore, purchased in 2008 on which a residential complex
consisting of 24 flats, tobe sold on owemnship basis, i under constuction
for las 18 months.) NN] A
‘Two office fats st Calevtta purchased for resale in the year 2004, ~> NI fr
© Share of groep companiss, break wp value of which is Rs. 6:40,080.-5-T.
“@) Casb'at cojismetion site Rs. 3,20,000 ana NYT
‘©) Residential tlat in occupation of company's strate time
8 salmy of. 180,000 per annaen > NI
Which of.the above assets will be liable for Wealth Tax. Give reasons in
brief. 5
cetor drawing
PY Lid, has tet out a premises wie, 1-10-06 on soutlily cent ot
Rs, 1.00 lakh, The tease is valid for \O-years and the tenant has made a
‘posit equivalent to 3-months cent, The tenant fas undertaken to pay tho
municipal taxes of the premises amounting to Rs, 1.00 lakls. Whit willbe the
Yalue of the property under Schedule IT of the Wealth Tax Act for the
assessment 9 Wealth Tax ? PS
U1.
~ 516 4.
SECTION =
Compulsory
XYZ. La,
‘iceds 9 component in aw asscinbly operation’ It is conte
Pepesil to cer make or buy the aforesaid componcy
1 the covnpny decides maketh product tet ten
aching for Rs. 8 lakh which would hie used fer
coir dn Sw ot the use fens raul bel lakh, RS. 1 lakh,
Ae: 10 lakh, Rs. 20 lakh and Rs. 25 lah respectively
depreciation rate is 15%. The machine Will be sold for Rs. 1 lakh
the 3 year.
ing the
t would heed t0 buy a
outs. Matistactininy
fhe relevant
hat the end of
2) The company decides to buy the component from ‘supplier the component
reap east RS. 18 lakh, 20 ah, Rs. 22 lath, Rev 8 Jak and Re, 44 Jah
respectively in cach ofthe five year
3s liscoumting tt and tax rate are 14% ane 39
(66% respectively
Should XYZ shake-the composent oc buy from acne 7 ae PS ~ 598
TL Semester MLPA, Examination, June 2006
(Semester Scheme)
Comntencr, ;
Paper - 2.3 : Direct ‘Taxes Planning
Tine : 3. Hos : ans ise ep
SECTION -
1+ Answer any tex question from the following, Bach question casies twee
‘marks, (10x22)
+9) Give the meani
of Domestic Company.
1) What are the principles of dicct ation?
© When the advance payment of Tax arises?
B_Stawe ity sittemnce of vaio sat ler Wealthy "Tae Ave
4 How dvds re Ted in ata 2
9, Sine ts exeunstaas wets: ea te mae
8) Who bas to obtiin PAN
1) Sap the reitsessment provisions
AL Stte the need for inuoducing MAT,
Give the meaning of cotoarle
§) State Tax provisions US su 31a,
Hier whit circumstances additional depreciation can be claimed Ei SECHON
Answer amy three questions. Buch duestioh canies ive mack. Oxs=t5)
Tove is ths incidence of Wealih Tax alfevted hy nationality nnd residential
‘ol an assessee ? Explain with suitable examples,
*. Explain Leasing Vs-Buying of a business asst as Tool of Tox planning:
4. Explain in btief the provisions celating to payinent of advance Tax.
yh 5 NRN Lid. files its return of toss forthe A ¥ 2005-06 on 1-12:2008. ‘The following
(© ~ data is taken-foom retum,submitied by the company. !
Treatne (Loss of the PAY. 04.05 :
Rs. ‘
Business kes for the PY 04.05 (Belore
lepuecisiog aud capital expemtina iin
scientific esearch) & 13,60,000 .
Depreciation 10,000
Capital expenditure for scientific research + 1,60,000 ,
1H Tent Capital loss ~ = 360,000 .
Lovig: Tetm Capital gain 80,000
Tneome ftom other sources 1,84,000 e
rough forvard less of theeartier years which as ben determined in psuance
of return filed within the time limit of Sec. 139(1)
Rs, .
Unahsoibed depreciation pertaining tile
AYs + 1997-98 and 1998-99 436,000
Business loss of the PY 2001-02 44,000
Capital loss of PY 2003-04 2,80,000
‘Compute the loss to be carried forward
6. How do you compute book profits for MA'T. purpose ? SECTION — ¢
Answer'any two questions. each ‘etion careies tte
en marks. Answer to
Weory guestion should not
eicced three pages, (@xt15=30)
7, Discuss the folowing:
* Foreign Coltabecaton agreements
2) Deduction WS. 80 114,
B Texinyco Co: Lit, Penis te fy
{or the petiod t-1-2005 w 34
incothe fo the
‘easons
owing iatormation
2006
ALY. 2006-07. Your 9
0 in resp
ind seeks your help in computing
OnWerSHOULBive detailed workin
°C OF is bavinggs
2 is tua)
sand
: rolt and Loss Appropriation
br. (es.
To General reserve
Account
Cr tts
$00,000, By Net prait broughy
domo Pi ae 2 un. ooy
By cash assistance
Received from Govt
Agninst exports 4.00,000
By Duy draw back
‘gairst exports 3.00.00,
Bogoeg = * 500,000
Wid : i Land Account
Balance Vioughe forward (eing
cost of land purchased in 89-90) <10,00,000 ~ Salo
18,39,009
Froess carried to capital reserve! 8, 50,009 5
* 18,50,000 18,38,906
Plant and Machinery Account
Ralanee brouptt forward 100000 Depreciation 4000
Hxeess carried te capital
reserve * 12,00,000. sates 20,50,00)
24,00,000 24,00,000
Acquisition of know
Aniount paid t© laboratory Balance carried
owned by Govt" 3.00.00 Forward
how Account |
0,000 oat
Puvestntett Depasit Acconnt “
Amount paid to IDBY 300,000 Balance carried
Forward
3,00,000
S09.008
Ae a under which
(U Salaries ana,
the bospitalisa
© te RPP. p;
Pirther dotaits are revealed on your enguicy:
Ages Account inetd (a
) sum of Rs. 1,00,000 paid
ap SUBerY Charges ofthe M.D. (b) Employers con
‘v4 fr period endl 31:3-06 on 31-12-06 - Re L0G uae > s PS ~ sog
@ Loss tom business brought forvatd fom AY 2005-06 Rs. 8,0,000
©) Ascott sisi two blocks only and the balance Drought forward represents the
WDV ef the block. :
(9. Coetintation inde, tor 89.90 — 172 and fox 05-06 - 497.
Explainthe Term ‘Tox holiday. Whatace th conditions under which such bent
available to the assessec USS a0 - La?
pitihe PY ended on 31.3.06, Mis Bmen Co, Ud, fomishes Following particulars
‘nvespectotitsnssets and! liabilities
Assets Book value or WD Market Value
‘ 8 on 31.3.2006 a 60 31.3.06
4 Rs. Ry:
2) Ottis comptersStore coom 25,00,000 15,00,000
2) Commercial complex (et out), 500,000 17.50:000 *
9), Residential bingatow alloted A
‘Treo avin » salny ef Rs. 0000 PA. >,So.nn0 12.50.0009
4), devellery old held as investneny and .
ot for business purpose 5,00,000 15,00,000~
2) Station Wayon "5.0000 8,00,009 +
O TlianPoreien cars ised for baiess = 1g 0,000 25.00,000
2 Sipoted dy itlowed to M.D. of uno woo 700,009
®) nvesnit ig shares 2,50,000 4,00,000
9) Plant and Machinery 15.73,000 16,00,000
10) Furiture-and Fixtures (Gold studded) 2,090,000 400,000
1) Stock-in. Trade 25,000, 40,000
12) Debtors 2.Rs 750,000 2.50,000
'5) Cish in hand as per book 2,50,000 2,50,000
89,50,00,
Ai. PS ~ 598 Sy 4
Liabilites Ree ais Rs,
a) Preferenceshares 27,50,000 -
+8) Bauity eapitat 37.50,000 -
+ onus shaves »» 4,00,000 -
@) General reserve 0,000 =
Pe) PL Me 150,000 ~
8 Loan against imported car 5,00,000
®) Creditors & np A «. !2,00,000
89,50,000
AOU AYE reauited to compute the Net Wealth and Wealth Tan payable for the
AY 2006.07, ‘
ION ~D (Compulsory) 1s
‘Anisset costing Rs 10,00,000 is to be acquited, There, arotwo alternativesavaila
rey antbteneut First one i buying the aset by taking a 01,
14m pan aevaranen salient oF Rs. 2.00 lath each Stong ee interesy @
Min DE assuming that lease rents; processing fees, interests well ag ve
iwi anos aap {he Yeu end, The secon one iseasing taser
for witch: ninual lease rent 00,000 upta 5 years. The lessor char "yes
UB as processing fees in the fist yer. Assume'te internal sate-0f return to be
10% athe presem value ctor © Ih ig
Years 1 2 3 4 a
PVFactor 909 996 ast 683621
$uBgest which aleative is better in the above case ‘Assume the Tax rae to be
33.66%, Scones
ioe be Kiya
PS 763
Sem. MEA. Examieation, May/June 2005
+ Gemester Scheme)
COMMERCE 23 Z
Direct Taxes Planning
Thies 3 Hours Max. Marks: 30
SECTION
‘1 Defie Net Wen,
2) Under wit cireamces ‘Bla et is i
“‘) Nokme the dilferoemethods of ax clietion,
1D. Whar is meant bye jodgement assesment ?
2). Wa is ax hate? -
1), What arg the prides ofetettakaion 2
How to test te epson of aralganaivnlemcnser
SECTION-B.
Anovee i
on, Bch yest wen 5 rk uxs15)
©) etx plain ovis ih eens sh deo com
we of
business,
3. Discuss the liability bance tax by diferent assesoes,
>, * Whatdo you meant bys 2 How isi computed ?
S.Expain the
Provisions 'set off and cary forward of tosses
Taxa,
under Income 8 ~ 763 2
6 A La, bs ong the tines if mamitcture af aiecomiloners since
41990. On March, 31-2002 and March 31,2003, installed capacity Is 2takh
nts (per annum). Dung the PY. 2004-05, the following aseis ate aquired
‘o substantially expand the installed capocity Gistaled capacity an 31-3-05 is
225 lakh units per amu),
Block-1 Block =~ Bloeke = ir
Rate of depreciation 258 0% bon
Number of asets in each block 7 9
WDY of the bocivan L408 5 9.00009 —_17,10,000 500,040,
Auditions of plans (ve) a
during the PY. 2008-05 3
Plana 64,0000 - —
Pian ft s 6.00,000 .
Plame : -
Sule oF old plants loco —-21,98,000
{one plant in each block) i
ais 0° ai °C es na ii Te 20 al yo We
Jnly 2004! However plant °C" it to ase dwing the last werk of Noventber
2004, .
Find the (otliwing:
i) Adklitionl and momma i preciation forthe A.Y. 05-06,
1) Capital gain onsite uf old plans and
©) Depreciated value ofthe blocks on 14-05,
‘Answer any 2 questions. Bach question égnies 18 marks. Answer to theary question
‘Should not exceed 3 pages, = x
7. Explain the tax benefits of demerger and amalgamation of companies Brey
highlight the conditions o be fulfill to avail thoee benefits
Discuss the deductions Ui 80-1B.
9/XMD Ltd. is an Indian eompany engaged in the business of manutociure
discloses a profit of Rs. 40,00,000 for the year 2004-05 and the folowing
futher partic ate also made availble: "
1) “The closing stock ofthe ished goods tas waiformnly Been valued a 10%
Junder cost every your. The opening end closing stocks forthe Jesr wel
stiown inthe books &¢ Rs. 56.00,000 and 83,00,000 mspecival. 3 PS 76)
2) The book depreciation amounts to Rs. 15.00,000. For tax purposes
i" depreciated value of block of asséis on 1-4-04 is Rs 7500 O00"
(Depreciation tae: 259%) :
3) The mndernoted debits appear in the PIL e
~ Losson sale of fined assets Rs, 1.25000,
Transfer to imvesiment allowance reser account Rs. 300000, new
machine was acquiel dating the year atacost of. 1600,00 an brought
fimo use using the year (Rate of depreciation 23%).
4) The salaries include gravity of Rs. 80000 paid to a retired employee in
aczonlance with he rules and payinent of RS. (38.00 tote managing
"director by way of salary an comrhssin as penmated by he compare
{aw board The M.D. was provided wita nouse unc by theomjany
‘which deprociaion of Rs. 25.000 and repair expenses of Re 20,000 pore
claimed. The repai expenses nv inelikl in he Ile sero salen a
head. ‘Repairs 10 building’. The MLD. was alo reimbesod th sary op
“Rs. 2400 paid fora gardener anid Rs: 3600 paid for a domestic seere
‘The expenses are charged (0 “Miscellaneous expenses"
5) During the year plant apd machinery of book WV of Rs. 200,000 vas
8014 for Rs, 75,000. The WDV for income tax was Rs. 1.20000,
©) There i gre of Rs. 5,00,00 vo the prof nd oss acount a beings
Procebds Of impor entitlements which the company clue ae a copnd
Feceipé not chargeable to income tex
1) “Ametest account includes
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